Not a johnny-come-latteFor years Starbucks has grown like gangbustersby Matt Kranz, USA TODAY

SEATTLE -- To outsiders strolling through Starbucks' headquarters here, it's very clear there's something different about this place. The scent of exotic African coffee beans wafts through the offices. There's not a necktie to be seen, much less a suit. And the door to founder and Chairman Howard Schultz's office is always open.

In other words, it feels like a small business. But Starbucks is anything but. The company started with just one store in 1971 and didn't go public until 11 years ago, when it had 165 stores in four states and one Canadian province. Now, it has 6,800 stores worldwide.

The growth hasn't just been a blitz of new store openings. In August, the company posted its 140th consecutive month of sales growth at stores open at least a year. It has done this by offering -- in addition to its ever-expanding menu of coffee and tea drinks -- an eclectic array of products and services, including music CDs, board games, wireless Internet access and prepaid cards to its 25 million repeat customers. And while most companies are just thinking about refilling jobs vacant from the raft of layoffs the past three years, Starbucks is hiring 200 people a day.

To be sure, Starbucks has had its setbacks. The company shuttered its stores in Israel this year and continues to struggle in Japan. Still, its moves have transformed it from a one-outlet coffee store in Seattle into a company valued at more than $10 billion, whose stock has gained 2,057% since its June 1992 IPO.

USA TODAY's Matt Krantz sat down with Schultz for his views on growing a company, even during a recession, and even where it seems like there's already a Starbucks at every corner:

Q: Is there still room for Starbucks to grow?

A: Both domestically and internationally, we have dramatically underestimated the size of the overall market. I don't think we're halfway to the total number of stores we'll have in North America when it's said and done.

We're opening three to four new stores a day; we've committed to open at least 1,300 stores next year. These are still the early days in the growth and development of Starbucks -- I have no doubt in my mind.

Q: But how much coffee can people drink?

A: We'll finish this year with more than $4 billion in revenue. We're now the largest brand of coffee as a result. But we have less than 7% share of total coffee consumption in North America. We have less than 1% outside of North America. The size of the prize is so big.

Q: What separates companies that can keep growing from those that stagnate?

A: What Starbucks has created -- what is a common thread in a lot of great companies and companies I respect, whether it's Southwest Airlines, Timberland, Dell or Nordstrom, these are great companies. Those companies are linked to a unique relationship with their people (employees). Those people are linked to a unique relationship to their customers.

Q: But how does Starbucks grow without gaining the image of an imperialistic chain?

A: What I'm most proud of over the past 15 years is that Starbucks has integrated a social conscience in all parts of our business. That's one reason we've done so well.

We're living in a time where the consumer is doing something they've never done before. They're performing their own audit, a cultural audit of what a company stands for. That cultural audit has to do with your culture, your values, how you take care of your people, are you giving back to the community and how you're serving the greater good.

Q: As Starbucks grows, it must look to smaller cities that may never have seen an Italian-style coffeehouse. How is that going?

A: In the last few years or so, (we've opened) in Des Moines, Iowa; Omaha, Nebraska; Jackson, Miss. These are what I characterize -- not in a negative connotation but market segmentation point of view -- secondary markets whose unit economics from a financial standpoint are as good as or better than traditional stores.

Q: How do you control quality as you grow, and serve coffee in airplanes and grocery stores?

A: We have a separate licensing division. And the level of training and commitment -- we said early on, if we're going to be into the licensing business, which is still very small, that there could be no dilution whatsoever. The execution of the store from level of hiring and training, look of store, everything, has to be exactly the same.

Q: How does the company ensure it will have an adequate supply of coffee?

A: We have long-standing relationships that go back 10 and 20 years in coffee-growing regions. We'll need a lot more coffee in the future -- and we don't want any dilution with quality. What we decided, even though it's a downturn in the market, we had a responsibility to the relationships. . . . We created a program where we were going to pay a premium, over- the-market price, for the coffee. In doing so, we will give the growers some relief, even though the current market for coffee was down.

Q: How do you make sure the Starbucks in Tokyo has the same quality as one in Seattle?

A: One thing we've done well internationally -- we've built partnerships the same way we hire people: on like-minded values. We're in those markets a lot. We've moved people with Starbucks DNA to those markets. It's exciting for those people to have those opportunities. The guy running Greece with our Greek partner is a kid from Chicago. The operations manager in Japan now is from Portland (Ore.). There are stories like that all over the world.

Q: What is the goal for growth overseas?

A: We have over 1,600 stores outside of North America in over 30 countries. We expect the business to be profitable in '04, which we feel is a tremendous accomplishment. We believe we'll have more than 15,000 stores outside of North America when it's all said and done.

Q: How has the Starbucks prepaid card helped the company grow?

A: The Starbucks card now accounts for more than 10% of all sales. A new card coming this fall will be the first of its kind of a two-in-one card, which is a Starbucks card and a Visa credit card. You will be able to use the Visa credit card anywhere in the world. When you do that, there is a rewards program built into the card, which is applied to your Starbucks purchase.

Q: How significant has the offering of wireless Internet access, or Wi-Fi, been for Starbucks?

A: I get the Wi-Fi results weekly, but I've now asked for them daily because the traction is taking hold. What I'm interested by is the increase in the number of minutes people are staying on. I'm a big believer in the technology.

Q: Has the addition of Wi-Fi encouraged Starbucks customers to drink more coffee at the stores?

A: We're getting incremental traffic, which is adding to the positive aspect of the technology. People are staying more, and sometimes buying more coffee. But we don't mind (if they don't). . . . I want people to have a great experience at Starbucks, and we think Wi-Fi adds that.

About Howard Schultz

* Age: 50

* Raised in a Brooklyn public-housing project. Rose to marketing executive of a small chain of Seattle coffee shops before buying out the owners in 1987.

* Stepped down as CEO in 2000 to become chairman and chief global strategist. Orin Smith is the company's CEO.

* Quarterback for Canarsie High School football team in Brooklyn. Attended Northern Michigan University on a football scholarship. Communications degree (1975).

* Principal owner of the Seattle SuperSonics of the NBA and the Seattle Storm of the WNBA.